CIT Group successfully completed a tender offer, the company said today. Bondholders representing 59.81% of CIT's $1 billion in outstanding floating-rate senior secured notes tendered their bonds by the offer’s expiration date of Aug. 14. The bonds mature today. Despite this success, analysts have strong doubts about CIT’s ability to avoid bankruptcy.

The New York-based bank and business lender recently amended the terms of the tender offer. CIT lowered the minimum threshold required to complete the offer to 58% from 90%. As a result, the firm had enough support to complete it. Morgan Stanley and Bank of America Merrill Lynch were the dealer managers for the offer; D.F. King & Co. served as the information agent.

A CIT spokesman declined to comment further, except to say that the completion of the offer is “another important milestone as the company continues to make progress on the development and execution of a comprehensive restructuring plan.”

Analysts said that the future of the company is still precarious. “We think the completion of this offer is an important step in CIT's restructuring, but it does not mean the company will absolutely avoid bankruptcy,” said Matthew Albrecht, an analyst with Standard & Poor’s. “It likely needs to shed more assets and will probably need to get additional concessions from creditors as it works its way back to profitability.”

“The dramatic drop off in liquidity suggests that the market has become very one-sided on the future of CIT,” said Thomas Aubrey, a managing director with Fitch Solutions in London. He noted that CIT’s liquidity score has decreased to 6.42 from 8.36 over the last three months.
Successfully closing the tender offer has kept CIT out of bankruptcy for now. Without bondholder support, the firm would have breached the terms of a $3 billion loan facility that it received from bondholders last month, which could have forced it to file for bankruptcy.

The firm made moves throughout the tender offer to bring creditors into the fold. It increased the early-delivery payment by $25 to $50 for every $1,000 worth of securities tendered. Bondholders will get $875 for every $1,000 tendered, and CIT said it will pay amounts due on notes that matured but were not tendered.

CIT has more than $10 billion in debt coming due next year and has reported losses totaling more than $3 billion over the past eight quarters. Several reports noted that the firm may need as much as $6 billion to avoid bankruptcy. In July, the government denied CIT’s request to access the Temporary Liquidity Guarantee Program, which would have provided the company with much-needed capital. CIT received approximately $2.3 billion from the government in December, when it became a bank holding company.

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